Jacksonville Gas Prices

[spuwho]

With the recent drop in the gas prices (yeah!) we have been enjoying some price relief.

What has been more interesting is some station operators absolute snail pace in lowering their prices.

The leaders of the pack appears to be the Murphy Express and RaceTrac on Beach on either side of the east beltway.

Variances of 10 cents has been the norm during other price drops, but this particular drop seems to have a different effect on area pricing.  In this particular price drop, I am seeing price delta's as much as 30 cents per gallon.

The aformentioned Murphy and RaceTrac appear to price based on "spot" pricing, basically what gas is trading for on the open market that day.  Whereas others are dependent on contract pricing and cannot change their price until they refill with a cheaper load from their distributor.

Gate appears to be the slowest by far in adjusting to market rates. Kangaroo/Valero also seem to drag their feet. Shell (Dailys) only seems to adjust depending if a competitor is close by. The two stations on Gate Parkway have carried a 20-25 cent per gallon price premium throughout.

The absolute worst place to buy gas in Jacksonville is on Airport Road west of I-95. They run on average a 30 cent premium per gallon.

Source: GasPriceBuddy

[mbwright]

Funny how they will gladly raise prices in an instant, but take forever to lower.

[Gunnar]

The absolute worst place to buy gas in Jacksonville is on Airport Road west of I-95. They run on average a 30 cent premium per gallon.

Source: GasPriceBuddy

Probably taking advantage of people needing to fill up their rent a car before dropping it off (I have gotten gas there on occasion).

Man, I miss the days of $1 / gallon (and especially not having to pre-pay before getting gas - that can be really annoying if you have a non-US credit card).

[coredumped]

Remember when people were outraged at first when gas hit $2? Then $2.50 and $3? Now, we see $2.75 and think "wow, what a bargain!"

[Jessicapants]

Remember when people were outraged at first when gas hit $2? Then $2.50 and $3? Now, we see $2.75 and think "wow, what a bargain!"

I remember making fun of my then-boyfriend in 2005 for being the first person I knew who had ever paid $3.00/gal for gas.

This year I started getting excited when it fell to under $3.45/gal...

[chipwich]

The leaders of the pack appears to be the Murphy Express and RaceTrac on Beach on either side of the east beltway.

Variances of 10 cents has been the norm during other price drops, but this particular drop seems to have a different effect on area pricing.  In this particular price drop, I am seeing price delta's as much as 30 cents per gallon.

RaceTrac and Murphy tend to lead the pack for several reasons. 

1. First and foremost, there are a lot of gas options on Beach Blvd.  These two operators have two new, very large, very expensive locations set up and they need to fill up their stores.  Most profits comes from inside sales, not gasoline sales.

2. Those stores buy unbranded gasoline (as does Gate).  They can buy any brand of gasoline that gets dropped off at the terminal.  Gas is gas, so they can just buy whatever is cheapest and pass the savings right on to the customer. 

3.  The bigger the station, the more they sell, the greater the turnover.  Wholesale RBOB (refined blended gas) prices change daily. Sometimes by as much as 10-15 cents per gallon.  As the price has been dropping, stations that sell more gas are able to buy the newer gas at lower prices.  Those stations that purchased gas at higher prices do not want to take a loss on their product (think small, old gas stations with higher prices). So the more you sell, the more you save.

4. Currently, gasoline in Jacksonville should sell for roughly 55 cents over the RBOB spot price for the area.  The national spot price is currently around $2.05 cents per gallon.  The 55 cent premium should pay for all national, state and local taxes, plus about a 10 cent profit to the station to cover their costs and credit card processing fees.

5. Gas station operators are always quick to raise their prices (as they cannot afford to take a loss) to match the day to day increase in the spot price.  However, downward prices is where they catch a break and make more money. So, it seems likely that stores selling gas around $2.75 a gallon are pocketing an extra 10-15 cents per gallon while they still can.  Those locations just have staring contests with their competitors to see who will blink first.

I hope all stations lower their prices soon.

[Gunnar]

Remember when people were outraged at first when gas hit $2? Then $2.50 and $3? Now, we see $2.75 and think "wow, what a bargain!"

The best fill up ever was right across the Border in Georgia when a gallon of premium was about 80 cents a gallon. Must have been in 98 / 99.

Note: Looking at today's prices (even though they have gone down a bit from their max), they would make road tripping a lot less fun.

This chart went back the longest that I could find online:

http://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=pet&s=emm_epmru_pte_r1z_dpg&f=m

Well, enough reminiscing about the good old times.....time to listen to Classic alternative Rock 

[ProjectMaximus]

  I'm happy with the four EV charging stations in the Water Street Garage. Looking forward to seeing more...as has been promised by the TPO and city.

[blizz01]

RaceTrac is aggressive - they usually send the GM out on a gas survey daily to hit ~5 other stations within a 3 mile radius.  The results are keyed in & sent to Atlanta; within 10 minutes adjustments are made to the digital signboards.

[spuwho]

I'm happy with the four EV charging stations in the Water Street Garage. Looking forward to seeing more...as has been promised by the TPO and city.

Don't forget the new LNG refill terminal that JTA has setup. Good for the buses and some UPS trucks.

[spuwho]

Gas hit 1.99 in Oklahoma last week.

[ProjectMaximus]

I'm happy with the four EV charging stations in the Water Street Garage. Looking forward to seeing more...as has been promised by the TPO and city.

Don't forget the new LNG refill terminal that JTA has setup. Good for the buses and some UPS trucks.

Yeah! I hope LNG growth provides lots of opportunities for Jax.

[spuwho]

I'm happy with the four EV charging stations in the Water Street Garage. Looking forward to seeing more...as has been promised by the TPO and city.

Don't forget the new LNG refill terminal that JTA has setup. Good for the buses and some UPS trucks.

Yeah! I hope LNG growth provides lots of opportunities for Jax.

You can buy a futures contract for gasoline for January (2015) for only 1.76.

Why so cheap?

Demand for the 4Q-1Q oil is coming in a half billion barrels less than expected. Due to the high amount of shale oil coming out of the US, more than demand can absorb, this is causing a price drop. (Stephen Joost, where are you?)

The Saudi's announced in the last week;s OPEC meeting that they will not reduce output and are compensating for the shale oil by getting European oil entities to sign long term pricing contracts.

Essentially, the Saudi's are trying to repeat the price war of the late 80's. Oil was priced high due to the changes in Iran and other market factors. With gas prices now deregulated in the US, the oil business in Texas started taking advantage of the high prices and started over pumping relative to demand.  The Saudi's met every price drop until finally the bubble burst and oil prices collapsed.  The Saudi's with very cheap oil and mega financial reserves came out on top while the barons of Texas, who had borrowed money at high interest rates to take advantage of the boom, they all went bust. (Some say this is why Saddam went for Kuwait)

However, things are a little different now.

Interest rates are at all time lows. The cost to pump shale oil has been dropping incrementally each year. Studies show the Saudi's cost of pumping oil to be less than $25 barrel. Shale oil is reported to cost $72 a barrel to extract.  Russian oil is around $76 a barrel.

The shale oil crowd are saying that they have already recovered their costs to pump when the prices were high and can match any cost per barrel the Saudi's attempt to reach to clear out the market. Their financing was cheap and their fixed costs much lower now.

A side effect of such cheap oil?

Politically it will hurt 2 countries the most.

Venezuela needs oil to stay at $70+ barrel to maintain social programs (diverted from oil profits) that President Hugo Chavez started.  The country will either have to reduce the wealth redistribution effort or take on inflation by over printing their currency to compensate which will cause even more inflation.

Russia, which during the Soviet era used to compensate by selling its gold reserves on the market, now relies heavily on oil profits (and natural gas). This is why Putin ousted many of the oil barons. Now with oil prices collapsing and the ruble falling due to sanctions, all he has is natural gas sales to Europe. They are hurting two ways.

Less hurt will be Iran. Even though there are sanctions in place, they are still getting enough through barter sales, but their economy is hurting and will be even tougher with the price drop. This will mean they will have to get less to barter for the same amount of oil.

If the prices completely collapse, then we will have a total stoppage of exploration as the capital investment model says any new oil that costs more than $70 a barrel to extract is not worth it. This is why the rushed merger of Halliburton and Hughes Tool last month.  They could see the crystal ball of an oil bust coming and with it the drop in exploration. They make a large amount of profit selling oil drilling equipment.

Who benefits?

Oil traders will take long positions on cheap oil knowing that someday, somewhere, either a war or a supply issue will force the prices back up. They will take advantage of the price delta.

Road builders. With gasoline getting below levels of inflation, people will be prompted to change their driving habits by either driving more, or driving larger vehicles even though US fuel economy standards are slated to get even tougher in the next 10 years.

Airlines.  Now able to buy long term futures in jet fuel at prices almost 50%less than last year, they can keep prices competitive and still make a profit.

Anyway you look at it, gas will be cheap for a little while and there is going to be an oil bubble bursting and this will cause political turmoil in several countries.

[spuwho]

After months of price declines, gas prices are now at what many in the industry now consider the bottom.

Crude oil prices have settled and excess capacity has been absorbed in the market.

In Jacksonville we were able to reach 1.92 during the bust. The price gap between spot and contact prices are now at a low of 10 cents or less.

It was nice while it lasted. Did anyone see anything lower?

[coredumped]

I think until they start going up (which could be a few months or years even) we can't say for certain that this is the bottom.
There's always speculation on both sides, someone is always wrong.